One-in-eight homebuyers in the Republic used a gift or an inheritance to help them get on the property ladder, according to new research by the Banking and Payments Federation of Ireland (BPFI).
In its latest housing monitor report, the banking lobby group said while the average loan-to-value (LTV) ratios for first-time and subsequent buyers did not change much between 2019 and 2023, average house prices increased substantially, requiring bigger upfront deposits “which raises the question of how people are meeting these rising deposits”.
The BPFI noted that some of the increase is likely to have been met through buyers’ own savings on the back of increased earnings while another source is likely to have been the Government’s Help-to-Buy tax rebate with applications up 41 per cent already this year.
However, the BPFI, as part of its report, published a survey showing that 38 per cent of Irish adults have received a substantial gift or inheritance with approximately one-third of these people using it to buy or build a home.
“This means that nearly 13 per cent of Irish adults have used a gift or inheritance to help them buy or build their own home,” BPFI chief executive Brian Hayes said.
Data from Revenue and elsewhere suggests most people inherit in their 50s which means many home buyers are likely to have received gifts from “the bank of mum and dad”.
The BPFI’s report also warned that housing delivery was likely to be slowed this year because of “the increasing share of apartments in new housing developments”.
It said the longer completion times for apartments would most likely see new home completions this year at a similar level or marginally above last year’s 33,000 total.
“Looking forward, housing output is expected to increase in the second half of the year with the annual number of completions due to be at or above the levels observed in 2023,” Mr Hayes said.
“In addition, commencement activity points to a further increase in output in the short term, although with the share of apartments increasing, it is likely that we may see delays in the expected increase in total housing units.
“While mortgage activity remains strong, especially in the key first-time-buyer segment, the delays in housing delivery could have an impact on the growth rate in the mortgage market.”
The BPFI’s report also highlighted that while the market had witnessed a slight slowdown in mortgage activity in the first half of 2024, “demand for home purchases remains robust” with 49,384 mortgage approvals in the 12 months ending July 2024.
Almost 31,000 of these approvals were for first-time buyer mortgages, the highest annualised levels since the data series began in 2011.
What’s happening with Ireland’s housing crisis and where do we go next?
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